The benefits of establishing a physical retail presence for direct-to-consumer (DTC) brands provide a tried and true investment. For hybrid retailers like Warby Parker, blending e-commerce and brick-and-mortar stores is an integral part of their overall growth strategy and allows them to maintain brand connectivity both online and offline with plans to expand their footprint to more than 100 stores by the end of 2019.

At ConnectMedia’s conference ‘Connect DTC’ last month, it was suggested that DTCs need physical spaces to enhance connectivity with consumers — engaging them where they are to solicit feedback, provide a community space to interact with loyalists and gather intel on products to anticipate consumers’ needs. The brands featured on the panel shared the results they achieved — an uplift in sales, with fewer returns — once they committed to expanding beyond online and into a retail location.

Meeting the Customer Where They Are

After opening its fourth store earlier this month, Everlane CEO Michael Presyman said that “the key to succeeding in today’s turbulent retail landscape is meeting the customer where they are.” And where they are is everywhere: online, in-app and exploring the shopping districts of major cities. With 71% of all shoppers surveyed by First Insight Report spending $50 or more per visit when shopping in-store, it’s no wonder that some e-commerce brands are shifting to brick-and-mortar to protect their profit margins.

The road to profitability with DTC brands has been hit or miss. There is the benefit of the continued visibility from leveraging their brand on social media, and yet a singular presence online that commoditizes traceability and transparency can be tricky. According to Jason Goldberg, an analyst with Publicis, the increased exposure to pricing, especially between competitors, creates an overall threat to a brand’s bottom line when coupled with processing returns and the sales lost from shipping costs and restocking fees.

ConnectMedia’s insights from the conference show that retail stores tend to have higher average sales per customer and fewer returns. Studies show DTC brands experience on average a 45% increase in overall website traffic after a store opening. In our Summer 2019 Retail Spotlight Report, we discuss how DTCs can create valuable and impactful experiences for consumers by establishing a physical presence.

The idea is catching on with DTC brands as they dimensionalize how their products are introduced to consumers in real life. Many are strategically creating a smaller footprint with a laser-focus on location and a seamless experience that aligns best to their brand:

• Brooklinen will launch its first showroom and retail shop in Brooklyn later this year. The opening will promote its new Spaces concept, which features ‘shoppable stylized vignettes’ for brand loyalists to experience firsthand. CEO Richard Fulop recently shared the company’s plans to become a hybrid retailer and expand the footprint of his stores over the next two to three years.
• Away Luggage started exclusively online in 2017. It then rolled out its brick-and-mortar presence with seven retail locations, including its New York flagship store, with intentions to roll out 50 new stores worldwide over the next three years.
• Bonobos is moving forward with adding “try before you buy” locations after a successful run in Boston. The company states that of those who are using the service, about 35% are new customers and 65% are repeat customers with a higher average order value and conversion rate than those who don’t use the service.

I think we can all agree that retailers who want to grow must evolve and meet consumers where they are. For many of these brands, maintaining a personalized connection with consumers is a necessity and those that continue to provide unique customer experiences will set themselves apart from other e-commerce sites who stay online-only.  As we lean into the fast-approaching holiday season where ‘retail therapy’ is lauded by 40% of shoppers as a way to decompress, DTC brands will be contributing something new to the multi-channel consumer experience.

About the Author:

Anjee continues to be an insatiable enthusiast of all things retail. She’s a student of culture with a pulse on future shoppers and the fleeting trends constantly changing the retail landscape…driving retailers, landlords and developers crazy!